Problem $10-43($Algo$)$

Consider the following $$1,000$ par value zero$-$coupon bonds:

Required:

a$.$ According to the expectations hypothesis, what is the market's expectation of the one$-$year interest rate three years from now? $($Do

not round intermediate calculations. Round your answer to $2$ decimal places.$)$

Interest rate

$\%$

b$.$ What are the expected values of next year's yields on bonds with maturities of $($a$)1$ year; $($b$)2$ years; $($c$)3$ years? $($Do not round

intermediate calculations. Round your answer to $2$ decimal places.$)$